What exactly is Charisma? It's real. It matters. And it can be dangerous. (Fortune Classic 1996)

June 10, 2012: 8:53 AM ET

Editor's note: Every Sunday, Fortune publishes a story from our magazine archives. This week we turn to a 1996 story about the other Big C: charisma. From Jack Welch's gusto to Michael Jordan's 1,000-watt smile, this story by Patricia Sellers (now Fortune's editor at large) asks what is charisma -- and can leaders control it? Why charisma? Why now? Fair questions. After all, the American economy is flipping out, Europe is in worse shape, and business seems to be holding its breath anxiously for the results of what is likely to be one of the hardest-fought presidential elections in U.S. history. Simply put, charisma matters because it can save companies. It can create products and profits, it can motivate and stimulate. And, yes, it can change people's lives. The proof, of course, is Apple, which this coming week will almost certainly unveil a spate of dazzling new products at its World Wide Developers Conference. No doubt thousands of hard-working people have made Apple's monster success possible. But it was the vigor, the largeness of spirit, the aura of one man, Steve Jobs, that pulled the company through its darkest moments.

FORTUNE -- So, hotshot, you've got a sheepskin from a high-class business school. You've nailed the vision thing. You learned all those leadership bromides. You're tough but sensitive. And you've empowered everyone from your personal assistant to the company mascot.

You think you're on the fast track, right? Wait a minute. See that fellow moving into the corner office down the hall? He attended some middling college. Doesn't have an MBA. But he has an aura. He persuades people--subordinates, peers, customers, even the S.O.B. you both work for--to do things they'd rather not. People charge over the hill for him. Run through fire. Walk barefoot on broken glass. He doesn't demand attention, he commands it.

What's he got that you don't? In a word, charisma.

You don't hear much about charisma in business school. And you've probably never read about it in a business magazine. To most people, it's the inscrutable X factor--a mystical, almost magical career booster. Not many people have charisma. But when you talk to those who do, you discover that it isn't such a mystery after all. Yes, it's charm and personal magnetism, but--more important--it's the remarkable ability to get others to endorse your vision and promote it passionately. Charisma makes you a leader.

The guy on this issue's cover sure has it--and knows precisely how to use it to advance his career. You probably think Michael Jordan's magic derives from his transcendent talent on the basketball court or his $45-million-a-year celebrity. Wrong. Here is a man who cleverly deploys his charisma--and not just when he's in front of a crowd or a camera. Jordan, a co-captain of the Chicago Bulls, says he cares much more about being a leader than being liked. "I can inspire people to do things I believe in," Jordan tells FORTUNE, "especially when I see someone with ability who isn't trying his hardest." He rankles, sometimes infuriates, his teammates. But he uses charisma the way all successful leaders do: to lift the whole team's level of play.

Think of General Electric, where Jack Welch's kinetic zeal zaps employees like 2,000 volts. Or Ted Turner using his brash personality to attract luminous talent--then diffusing the wattage. "A full moon blanks out all the stars around it," says Captain Outrageous about himself. And the air reeks of charisma in the 26th-floor corner suite in Manhattan's Trump Tower. "I know more about charisma than anyone," says Donald Trump. "I think my charisma now is higher than ever. As I get more successful, I feel more energy around myself." Love him or hate him, the Donald is back from the financial dead, getting the highest condo prices in New York City. Asked by a FORTUNE reporter how she, too, might become charismatic, Trump replies, "Take over FORTUNE. Then go for Time Warner!"

Charisma is a tricky thing. Jack Kennedy oozed it--but so did Hitler and Charles Manson. Con artists, charlatans, and megalomaniacs can make it their instrument as effectively as the best CEOs, entertainers, and presidents. Used wisely, it's a blessing. Indulged, it can be a curse. Charismatic visionaries lead people ahead--and sometimes astray. They can be impetuous, unpredictable, and exasperating to work for, like Turner. Trump. Steve Jobs. Ross Perot. Lee Iacocca. "Often what begins as a mission becomes an obsession," says John Thompson, president of Human Factors, a leadership consulting service in San Rafael, California. "Leaders can cut corners on values and become driven by self-interest. Then they may abuse anyone who makes a mistake."

Like pornography, charisma is hard to define. But you know it when you see it. And you don't see much of it in the FORTUNE 500. As Al Dunlap, the pugnacious renegade who rejuvenated Scott Paper, says, "Corporate America, what a bunch of boring guys!" Look at the men heading the largest U.S. companies: Jack Smith at GM, David Glass at Wal-Mart, Robert Allen at AT&T, Robert Eaton at Chrysler. Eaton, like many charismatically impaired chiefs, has an inspiring lieutenant beneath him: Bob Lutz is Chrysler's magnetic, hard-driving No. 2. And most good CEOs compensate with other strengths--brains, toughness, vision, ambition. But those are commodities compared with charisma.

Why does it matter? Jeffrey Sonnenfeld, who chairs Emory University's Center for Leadership and Career Studies, says that when a CEO is perceived to have charisma, his business performs better. Direct reports feel inspired. Excitement cascades through the organization. Even so, says Sonnenfeld, "most leadership courses focus on followership and compliance and consensus management instead of leadership. The result is a sort of guerrilla war against charisma."

Charisma matters more or less, depending on the business. Says Gerard Roche, the effusive chairman of the executive search firm Heidrick & Struggles: "There are professions where charisma bubbles and boils and leads to success, and others where it doesn't make much difference." Such as? "Dentists, CPAs, morticians, engineers, architects, and bankers, for the most part, don't need charisma," reckons Roche, who has placed CEOs of both varieties. (Larry Bossidy at AlliedSignal has it; Harvey Golub at American Express doesn't.) By contrast, charisma matters enormously in startups, turnarounds, or whenever a business is ripping through rapid, unpredictable change. Aren't most companies these days? Robert House, a Wharton School professor who has studied charisma for 20 years, says that when conditions are uncertain, charismatic bosses spur subordinates to work above and beyond the call of duty.

Consider that combustible little Internet software company Netscape Communications. CEO Jim Barksdale used to be the No. 2 executive at Federal Express and then at McCaw Cellular. At both places he was considered a genius at motivating people. Barksdale, 52, has no MBA. His college degree is from the University of Mississippi. Barksdale's most valuable asset is his self-effacing, Jimmy Stewart-style affability. Frank and funny, he instantly charmed the two moneybags behind Netscape: Silicon Valley entrepreneur Jim Clark and John Doerr, high-tech's Uber-venture capitalist. "You gotta take the job, Jim," Clark yammered the day he first met Barksdale. "You can have my chairman's title and be CEO. We'll move this whole damn company up here to Seattle if you want."

As Clark tells FORTUNE, "A huge portion of what Netscape is worth is Jim Barksdale telling investors it's going to work. He has this great ability to convey confidence and give comfort." Adds Clark, who also founded Silicon Graphics: "To me, charisma is almost the definition of leadership." And he's willing to pay plenty for it; he and Doerr gave Barksdale an almost unheard-of 11% stake in Netscape. The stock has quintupled since its public offering in August, making Barksdale's holdings worth $500 million.
The irony is that, like a lot of people with charisma, Barksdale isn't sure he wants it. Blushing and burying his head in his hands, he says, "Charisma, to me, is almost a phony thing. It's what those TV evangelists have."

Finding people with charisma for this story was a vexing mission. FORTUNE scrutinized many candidates, rejected most, and identified four who seem to have been born with it: Barksdale, Jordan, new Sears CEO Arthur Martinez, and Bain & Co. chairman Orit Gadiesh. Martinez, in particular, feels a passion about the subject. "Charisma matters more than it used to," he says. "When you had command-and-control environments, everyone knew his role and almost automatically executed the boss's program. Today, if you're unable to galvanize people into action, all the thinking, the analysis, the strategic prioritizing doesn't matter at all."

Acquiring charisma isn't easy, and a lot of leaders shouldn't even bother. Who hasn't cringed at the sight of an awkward guy trying to be a live wire? Or remember Richard Nixon schmoozing with Elvis? Still, there are aspects of charisma that are very useful--and easily attainable. Says Jay Conger, a professor at the University of Southern California who has written books on the subject: "Understanding the traits of charismatic people can help anyone become a better leader."

SIMPLIFY AND EXAGGERATE. Charismatic people have a remarkable ability to distill complex ideas into simple messages. What's their secret? They communicate by using symbols, analogies, metaphors, and stories. If they're really charismatic, the guys on the factory floor, even the janitors, understand their pitch. Remember Jack Welch redirecting GE--going on the road to tirelessly preach his "No. 1 or No. 2" strategy requiring managers to "fix, close, or sell" any business that wasn't first or second in worldwide market share. Recall Ronald Reagan, unwavering on his two core beliefs: a strong defense and less government.

Barksdale uses the same technique. "Jim views his mission in life as boiling everything down to a few basic principles that motivate people," says Craig McCaw, who was Barksdale's boss at McCaw Cellular. McCaw, not a detail man, says, "Jim is like the World War II general, you know, in the movie Patton. The one played by the guy in the American Express commercial."

Karl Malden, Craig. He played Omar Bradley, the mild-mannered "soldier's soldier." Unlike the brilliant Patton, who often terrified his troops, Bradley was an amiable teacher who turned a million undisciplined boys into great fighters.

Last January, when Barksdale arrived in Silicon Valley, Netscape was a chaotic corps of 100 employees, some younger than his own kids. Engineers were panicked about product-delivery deadlines. Managers were bewildered about strategy. Jim Clark so feared Netscape would run out of money that he had imposed a hiring freeze. Says Marc Andreesen, 24, the engineer who developed the predecessor to Netscape's software with his pals at college: "We were spinning like a tornado. We were desperate for leadership."

Barksdale, who calls himself "the president of doin' stuff" and Andreesen "the vice president of thinkin' stuff up," says his first reaction was "to put the pedal to the metal. Let 'er rip." He lifted Netscape's hiring freeze, ramped up R&D, opened foreign offices, broadened the target market, and cut prices. His message to employees: Netscape is like a rocket. If it fails to reach escape velocity, it will crash back to earth. "We've gotta go full speed," he says. "We've got low barriers to entry and incredible competitors. If we can't establish presence and a brand name, we'll die." Inside Netscape, Barksdale promotes the strategy in two words: "Netscape everywhere." He describes the fight with the enemy (Microsoft) this way: "We're like an ant climbin' up the elephant's leg, with rape on its mind."

Many people figured Barksdale was cracked when he set a goal for Netscape to become the fastest-growing software company in history, based on first-year revenues. Morgan Stanley analyst Mary Meeker says that judging by recent financial results--including an unexpected profit in the third quarter--Netscape should hit its target and beat Lotus Development's record.

ROMANTICIZE RISK. Charismatic leaders relish risk. They feel empty without it. "Fear of failure," says Barksdale. "That's the thrill. It's what gets your heart rate up." Great optimists, charismatic people long to do things that haven't been done before. Whether they succeed or not, a remarkable thing often happens: Their audacity enhances their charisma. Take the case of Michael Jordan, baseball player. He hit .202, with only three home runs, for the Birmingham Barons two seasons ago. But he didn't strike out in the charisma game. Quaker Oats, which pays Jordan to promote Gatorade, surveyed consumers daily as Jordan floundered on his field of dreams--and found that his appeal never waned. Most people, in fact, related even more personally to Jordan the baseball player, in part because he seemed less superhuman--and more like one of them.Jordan, a master of modesty and swagger, understands this: "The picture painted of Michael Jordan always is, Whatever he does, he's great at it. A lot of people thought I wasn't successful at baseball because I didn't make it to the major leagues. Baseball gave me a more humanistic side."

Charismatic people speak emotionally about putting themselves on the line. They work on hearts as well as on minds. Arthur Martinez, the former vice chairman of Saks Fifth Avenue, knew he had big problems when he joined Sears in 1992 to rescue its sinking retail unit. "The old joke about the Titanic was not too far off the mark," says Martinez, 56, a polished Irishman (with a trace of Spanish blood). He was intent on luring top talent to Sears. "So I felt I had to be an evangelist. I needed disciples. I really was enrolling people in a mission."

Martinez met with almost all applicants who visited headquarters for jobs at the level of vice president or higher. "I started by explaining why I took the job," he says. Then he told them: "This is one of the greatest adventures in business history. Retailers don't turn around. A major retailer never has. There's no model for what we're gonna do. It's very risky. You have to be courageous, filled with self-confidence. If we do it, we'll be wealthier, yes. But more than that, we'll have incredible psychic gratification. How can you not do it?"

Martinez became CEO last August. He has assembled one of the best teams in retailing. Sears is gaining market share and is solidly profitable again. Says senior executive VP of marketing John Costello, formerly president of Nielsen Marketing Research USA: "I had no interest in switching jobs. Arthur changed my mind. He convinced me that Sears could be transformed, that I'd have a major impact."

DEFY THE STATUS QUO. Charismatics are rebels who fight convention. They may seem idiosyncratic, but their oddball image augments their charisma.

Defiance isn't easy for an insider. So Orit Gadiesh's success is particularly surprising. She is a high-decibel firecracker chairing one of the most secretive firms (Bain & Co.) in one of the lowest-key industries (management consulting) in an old-line city (Boston). Meeting Gadiesh, you first notice her skirt; it starts about eight inches above her knee. Then her hair; viewed from the side and back, it's magenta. Then her long red fingernails. She is complex, intense, driven, painfully direct, sometimes ribald, and a lot of fun. Bain was rebounding from dire financial problems when the partners elected her chairman in 1993. Largely because of her inspiring leadership, observers say, Bain has expanded to 1,400 employees, from 990. Revenues are increasing 25% a year.

The "Orit mystique" is well known around Boston and the consulting industry, as is her history: how this daughter of an Israeli army commander served two years in army intelligence, enrolled in Harvard business school knowing little English, and graduated in the top 5% of her class. When Gadiesh joined Bain in 1977, straight out of Harvard, she was one of the firm's first female consultants. Founder Bill Bain recalls her job interview: "The way she listened made my energy level go up. She asked the most thoughtful, original questions. There was nothing boilerplate about her."

Business, to Gadiesh, is not systematic. Success comes from pulling emotional levers. If you're a pinstriped stiff, she'll loosen you up--fast. "In a serious meeting, it wouldn't be out of character for Orit to sit down and put her feet on the table, high heels and all," says Bain managing director Tom Tierney, who has known Gadiesh since 1979. "The client might say, 'Don't you think we oughta be growing this business?' Everyone will nod. It'll be Orit who says, 'Wait. I disagree.' " Adds Tierney: "Her style comes from this intense passion about being true to herself and the client."

Like Barksdale and Martinez, Gadiesh abhors bureaucratic doublespeak--and the unthinking conservatism it usually reflects. She flashes her wit to kill it. A story she prefers that you not know: A few years ago she was trying to help Chrysler executives reduce options on cars, thereby lowering costs. The auto execs were leaning on market research to avoid tough decisions. "We can't cut that option because our average customer wants it," they said again and again. Exasperated, Gadiesh shot back, "Well, the average customer has one tit and one ball." The boys from Detroit got it.

STEP INTO ANOTHER'S SHOES. Not everybody "gets" Gadiesh. But clients, colleagues, and ex-Bainies have a remarkably consistent view of her: She is a brilliant consultant. While her looks and nervy style get her noticed, it is her empathy, they say, that makes her so successful. Charismatic people are able to see things from another person's perspective. Gadiesh, who spends 70% of her time working with clients, says, "I constantly try to think, 'If I were the client, how would I feel about this?' That's step No. 1 if you're going to find common ground."

Says James Morgan, CEO of Philip Morris USA, one of Bain's clients: "Orit has that talent for making you feel you're the most important person in the room. She bleeds your blood." One way she makes clients feel important is by never looking at her watch. Inside Bain, Gadiesh has long been regarded as a junior consultant's most generous mentor. "Orit defies expectations because she really is not a boisterous, intimidating woman," says ex-Bainie Dan Quinn, who heads Rath & Strong, a rival consultancy. "She's like a Jewish mother figure to many of the people at Bain."

Studies show that women tend to be better than men at stepping into another's shoes. But Barksdale proved himself to be fairly nimble recently when hackers cracked a security code in Netscape's software. What to do? Barksdale quickly assembled his key people. He let everyone toss out ideas about how to fix the problem and assure customers that the company's software is safe for navigating the Net. Then he made an odd suggestion: Give cash rewards to anyone who finds security flaws. What? That's like paying a burglar to break into your home to test the alarm system. Perhaps, but as Barksdale explained, "These hackers can work in our favor. They're experts on the Net. We'll tell 'em, 'Come on, crack our code!' "

And so began Netscape's Bugs Bounty program. Hackers receive rewards--ranging from $12 coffee mugs to $1,000 in cash--for reporting flaws. Thus far, two significant new bugs have been detected, and $2,000 in cash bounties have been paid. Simply by offering to pony up for its mistakes, Netscape won admirers. "If you admit you made a mistake," says Barksdale, "the customer will always cut you slack."

SPAR AND RILE. Charismatic leaders goad and challenge, prod and poke. They test your courage and intellectual mettle. Jack Welch or Arthur Martinez will lose interest in you quickly if you don't play at their level--or at least try to.

Michael Jordan is the same way. In the Bull's closed-door practices, he is always the loudest man on court. If you play against him and don't give 110%, he riles, he trash talks, he dunks the ball on you. Says Jordan: "That's just a way of being inspirational." His teammates often beg to differ. On court and off, they say, he never stops competing. But as Jordan explains, "Success isn't something you chase. It's something you have to put forth the effort for constantly. Then maybe it'll come when you least expect it. Most people don't understand that."

Scott Paper's Al Dunlap also succeeds by riling and trash talking. In one year, Dunlap created $6.4 billion in market value at Scott by slashing 11,000 jobs. Asked whether he has more enemies or friends, he laughs: "Shareholders love me! A lot of my contemporaries don't because I challenge the status quo and I don't give a damn." Now that Scott is being acquired by Kimberly-Clark, Dunlap is hunting for another corporate dinosaur. Says he: "I have zero problems with your calling me an egomaniac." Spencer Stuart President Thomas Neff, the headhunter who recruited Dunlap for Scott, says he's cautioned his man to cool it. "I've told Al, 'Don't be so outrageous.' He sort of listens. But he's enjoying himself so much."

So how do you manage charisma, this wonderful, terrible thing? Gadiesh suggests using an internal compass. She got the idea from her husband, Grenville Byford, an offbeat British entrepreneur who in the late 1980s spent two years sailing around the world by himself. When he returned, Byford talked with Gadiesh about the importance of "true north." An ordinary compass, he explained, points to magnetic north, which is fickle and unreliable. A gyrocompass, on the other hand, works on its own internal mechanical system and always points to true north. Gadiesh loved the image. She adopted true north as her personal guideline and as Bain's core value.

"The most important thing a leader can have is true north," Gadiesh says. "It's a set of principles that directs him or her to what's virtuous and right. Charisma can be a positive or negative force. It all depends on whether it's anchored by true north."

Learning charisma from people who are loaded with it is a bit like studying acting with De Niro or playing basketball with, well, Jordan. Regardless of how hard you try, you may never win an Oscar or make it to the pros. But you'll certainly improve your technique--a crucial advantage no matter what your career.

Reporter Associates Shaifali Puri, David Kaufman

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